Frequently Asked Questions
What are the student loan repayment thresholds for 2025/26?
Plan 1: £24,990. Plan 2: £27,295. Plan 4 (Scotland): £31,395. Plan 5 (new students from 2023): £25,000. Postgraduate Loan: £21,000. You pay nothing below these amounts.
How much do I repay on Plan 2?
9% of earnings above £27,295. On a £35,000 salary: (£35,000 − £27,295) × 9% = £693/year = £57.75/month.
What is Plan 5?
Plan 5 applies to students starting undergraduate courses in England or Wales from August 2023. The threshold is £25,000 and the write-off period is 40 years — longer than Plan 2.
When is my student loan written off?
Plan 1: 25 years after first due repayment date, or at age 65. Plan 2: 30 years. Plan 4: 30 years or age 65. Plan 5: 40 years. Postgraduate: 30 years.
Do I pay student loan on all my income?
You pay 9% on income above the threshold from employment and self-employment. Investment income, rental income and dividends do not automatically trigger repayments (though HMRC can include them via Self Assessment).
Can I voluntarily overpay my student loan?
Yes — you can make voluntary overpayments to the Student Loans Company. However, this is generally not financially advisable unless you expect to repay in full, as unpaid loans are written off.
What happens if I work abroad?
You must notify the Student Loans Company. Repayments continue based on equivalent UK earnings for your country of residence. Exchange rates are used for non-sterling income.
What is the interest rate on Plan 2 loans?
Plan 2 interest is RPI + up to 3% while studying, then RPI to RPI+3% based on income (£27,295 = RPI only, £49,130+ = RPI+3%). From Plan 5, the rate is simplified to RPI only.
Do student loans affect my credit score?
No — student loan repayments do not appear on credit reports. However, lenders ask about student loan commitments on mortgage applications as it affects affordability calculations.
Can I pay off my student loan early?
Yes — you can pay lump sums or clear the balance at any time. However, unless you have a Plan 1 loan (lower balance/interest), clearing early is often not financially optimal vs investing the money.
What if I have both a Plan 2 and Postgraduate Loan?
You repay Plan 2 first (9% above £27,295), then Postgraduate (6% above £21,000) on top. Both deductions can run simultaneously through PAYE.
Will the threshold change next year?
Thresholds are typically reviewed annually. Plan 1 and Plan 4 increase with RPI/inflation. Plan 2 thresholds have been frozen (then changed to £27,295 from 2022). Plan 5 threshold may increase with inflation.